New data adds fresh pressure on the ECB to tighten monetary policy. As Ciara Lee reports, German industrial production rose more than expected in May, Spain's rose at its fastest rate in nine months.
The opening stampede of Pamplona's bull-running festival. The sprint, which attracts around 2,000 runners, lasts just under three minutes. Hoping for longer distance success - Spain's economy. Industrial output rose at its fastest rate in nine month in May with growth seen in almost all sectors. Leading the charge though was Germany. Industrial production there rose more than expected in May. But as the good data keeps coming, some are asking whether underlying issues could hamper the region's recovery. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "Domestic demand has been quite weak, and it would suggest to me that we're still talking about economies that haven't quite got there yet. And if you add to that the banking crisis which is still there, And if you look at the debt sustainability which is still a big issue, not just Greece, but also for quite a lot of other countries, you do begin to wonder about the extent to which the sustainability of growth can be assured." With inflation in the euro zone slowly rebounding, the ECB is preparing to dial back its stimulus policy of ultra-low rates and massive bond purchases. But minutes from their latest meeting reveal it will likely move slowly out of fear of causing market turmoil. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "Though they've been making various noises recently about tightening, they haven't quite done that because they themselves are quite concerned about the fragility in some parts of the eurozone." Not everyone agrees though. Long-time critic of the bank's ultra-loose policy, Jens Weidmann says the faster economic recovery is giving the ECB room to pare back stimulus measures. Weidmann says while low borrowing costs are still needed, the threat of deflation is now a distant one and growth is becoming broad based.